Paging firms close merger, become USA Mobility


WASHINGTON-The $275 million paging merger of No. 1 Arch Wireless Inc. and No. 2 Metrocall Holdings Inc. has closed, following favorable U.S. review of a deal that drew no opposition and little attention.

The new entity-USA Mobility Inc.-will be based in Alexandria, Va., home to Metrocall.

The Justice Department signed off on the transaction last week, while the Federal Communications Commission quietly approved it the week before.

“USA Mobility is now the largest national paging company and the undisputed leader in wireless messaging. We have extensive network infrastructure, sales and distribution channels, and customer support capabilities. Our facilities-based messaging platform continues to represent one of the most compelling cost/benefit and reliable wireless communications offerings available today,” said Vincent D. Kelly, president and chief executive officer of the company.

Kelly added: “Through our strategic relationships we offer mobile phones; data applications, including Blackberry, Wi-Fi and in-building systems; and location-based services for customers who require more advanced solutions. We recognize that over the course of 2004 the paging industry has continued to shrink due to considerable competitive pressure from new cellular and PCS technologies. This consolidation in the face of that pressure brings together the best of both companies’ management, systems and practices and allows us to take advantage of significant financial and operational synergies that would not otherwise have been available to Arch and Metrocall on a standalone basis.”

USA Mobility said Metrocall shareholders who elected to receive cash for their shares of Metrocall common stock will receive $75 in cash per Metrocall share for a total of 2 million Metrocall shares of common stock. As a result, the company said, of more than 2 million shares being tendered by Metrocall shareholders for cash election, Metrocall shareholders who participated in the cash election will receive cash for approximately 42.38 percent of the shares of Metrocall common stock tendered. Each remaining share of Metrocall common stock, other than shares for which proper notice was delivered to Metrocall, and not withdrawn, seeking appraisal under Delaware law, has been converted into 1.876 shares of USA Mobility common stock. Each share of Arch common stock has been converted into one share of USA Mobility common stock.

On Nov. 17 the common stock of USA Mobility began trading on the NASDAQ National Market under the symbol “USMO,” and the common stocks of Metrocall and Arch ceased trading on the NASDAQ National Market.

USA Mobility said to partially fund the $150 million in cash consideration payable to Metrocall stockholders in the merger, Metrocall Inc. and Arch Wireless Operating Inc.-two subsidiaries of the new paging company-borrowed $140 million under a senior secured credit facility from a syndicate of lenders led by UBS Loan Finance L.L.C. and UBS Securities L.L.C. USA Mobility said it and substantially all of its subsidiaries have guaranteed the facility. Available cash on hand at Metrocall and Arch was used to pay the balance of the cash consideration to Metrocall stockholders as well as fees, costs and expenses associated with the transaction and will be used for working capital purposes of the combined company.

The Justice Department said the merger did not pose any competitive dangers, given the wide availability of alternative wireless services such as mobile telephony.

Justice said the number of paging units in operation has dramatically declined during the past five years, from more than 45 million units in 1999 to fewer than 12 million today.

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